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Authors Richard Deitz and James Orr find that although the U.S. manufacturing sector had a net loss of nearly 5 million jobs from 1983 to 2002, the number of high-skill manufacturing jobs rose by 37 percent, or 1.2 million. The authors examine the trends in high-skill employment both in absolute numbers and by percentage of manufacturing employment as a whole. The percentage of high-skill occupations in the manufacturing workforce rose from 16 to 25 percent nationwide, according to Deitz and Orr.

The authors observe that there are growing concentrations of high-skill manufacturing jobs across the nation, even in regions where manufacturing has suffered a significant decline. With the exception of one region, the number of high-skilled workers in the manufacturing sector has grown throughout the country, and has increased in most industries.

In the New England area (Maine, New Hampshire, Vermont, Massachusetts and Connecticut), where manufacturing employment has contracted since the early 1980s, the absolute number of high-skill positions has grown 13 percent. In the Middle Atlantic states (New York, New Jersey and Pennsylvania), the significant loss of low-skill jobs has nonetheless left a higher percentage of high-skilled workers even though the absolute number of such workers has declined slightly. In other parts of the country where the manufacturing sector is growing, including the South, Midwest and Mountain regions, high-skill jobs have grown at a faster rate than manufacturing employment as whole.

By industry, skill upgrading has varied in pace and nature. For example, the percentage of workers in high-skill occupations in the professional equipment and electrical machinery industries doubled over the 1983-2002 period, and absolute numbers also grew significantly. By contrast, the pace of skill upgrading was more modest in the transportation equipment industry.

Deitz and Orr's analysis relies on data related to the median wage in manufacturing, using the assumption that workers in more highly paid occupations are more skilled. The authors conclude that the nation's manufacturing workforce, while smaller, is now more skilled.

Richard Deitz is a senior economist at the Buffalo Branch of the Federal Reserve Bank of New York; James Orr is a research officer in the Microeconomic and Regional Studies Function of the Bank's Research and Statistics Group.